What is the Philippine Deposit Insurance Corporation (PDIC)?

PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to insure the deposits of all banks
which are entitled to the benefits of insurance. The latest amendments to RA 3591 are contained in RA 10846 signed
into law on May 23, 2016. RA 10846 empowered PDIC with stronger authorities to protect the depositing public and
promote financial stability. The new law also includes important provisions to ensure that the PDIC remains financially
and institutionally strong to fulfill its mandate under its Charter.

The PDIC now has the authority to help depositors have quicker access to their insured deposits should their bank close;
resolve problem banks while still open; hasten the liquidation process for closed banks; and mete out stiffer sanctions
and penalties against those who engage in unsafe and unsound banking practices.

The PDIC is an attached agency of the Department of Finance.

What is PDIC’s overall mandate?

PDIC exists to provide deposit insurance coverage for the depositing public to help promote public confidence and stability in
the economy. It ensures prompt payment of insured deposits, exercises complementary supervision of banks, adopts responsive
resolution methods, and applies efficient management of receivership and liquidation functions.

What are the functions of PDIC?

 Deposit Insurer
 Co-regulator of Banks
 Receiver and Liquidator of Closed Banks
What is PDIC’s maximum deposit insurance coverage?

Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit accounts by a depositor
in a closed bank maintained in the same right and capacity shall be added together.

Under R.A. No. 9576, the PDIC may propose to adjust the MDIC, subject to the approval of the President of the Philippines, in
case of a condition that threatens the monetary and financial stability of the banking system that may have systemic
consequences

What is an insured deposit?

The term ‘insured deposit’ means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of
any obligation of the depositor to the insured bank as of date of closure, but not to exceed P500,000.00.

A joint account shall be insured separately from any individually-owned deposit account.

R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following accounts or transactions:

1. Investment products such as bonds, securities and trust accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound banking practices;
4. Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-Money Laundering Law.

Are all banks members of PDIC?

Membership of banks to PDIC is mandatory; hence, all operating banks are members of PDIC.

What types of deposits are insured by PDIC?

Except for the exclusions stipulated in RA 9576, deposits of all commercial banks, savings and mortgage banks, rural banks,
private development banks, cooperative banks, savings and loan associations, as well as branches and agencies in the
Philippines of foreign banks and all other corporations authorized to perform banking functions in the Philippines, are insured
with PDIC. As for Philippine banks with branches outside the country, RA 9576 stipulates that subject to the approval of the
Board of Directors, any insured bank with branch outside the Philippines may elect to include for insurance its deposit
obligations payable at such branch.

Foreign currency deposits are also insured by PDIC pursuant to RA 6426 (“An act instituting a foreign currency deposit system
in the Philippines, and for other purposes”) and Central Bank (CB) Circular No. 1389. Depositors may receive payment in the
same currency in which the insured deposit is denominated.

Exclusions from deposit insurance coverage as stipulated in R.A. No. 9576:

1. Investment products such as bonds, securities and trust accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound banking practices;
4. Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-Money Laundering Law

Are deposits maintained in branches and subsidiaries of foreign banks operating in the Philippines insured by the PDIC?

Yes, the PDIC Charter provides that the deposits in branches and subsidiaries of foreign banks licensed by the Bangko
Sentral ng Pilipinas (BSP) to perform banking functions in the Philippines are insured by the PDIC.

Are deposits maintained in Philippine banks with branches outside the Philippines insured by the PDIC?

The PDIC Charter provides that a Philippine bank may elect to insure with the PDIC its deposits in branches outside the
Philippines. As of 31 December 2012, no Philippine bank has elected to insure deposits in their foreign branches with PDIC.

To verify if your deposits in a branch of a Philippine bank outside the Philippines are covered by deposit insurance in the host
foreign country, please inquire with the account officer of your branch.

What specific risks to a bank does PDIC cover?

PDIC covers only the risk of a bank closure ordered by the Monetary Board. Thus, bank losses due to theft, fire, closure by
reason of strike or existence of public disorder, revolution or civil war, are not covered by PDIC.

Shall the depositor pay any insurance premium to PDIC?

No. Insurance premium is paid by the banks, not by the depositors. The bank is assessed 1/5 of 1% per annum of the assessment
base of the bank.

How is insurance coverage determined?

In determining the insured amount, the outstanding balance of each account is adjusted, such that interests are updated,
withholding taxes are deducted, accounts maintained by a depositor in the same right and capacity are added together; and
whenever applicable, unpaid loans and other obligations of the depositor are deducted; and in no case shall insured deposit
exceed P500,000.

R.A. No. 9576 stipulates that PDIC will not pay deposit insurance for the following accounts or transactions:

1. Investment products such as bonds, securities and trust accounts;

2. Deposit accounts which are unfunded, fictitious or fraudulent;
3. Deposit products constituting or emanating from unsafe and unsound banking practices;
4. Deposits that are determined to be proceeds of an unlawful activity as defined under the Anti-Money Laundering Law.

Can PDIC insurance coverage be increased by having several accounts in the same name in an insured bank?

No. Deposit insurance coverage is not determined on a per-account basis. The type of account (whether checking, savings, time
or other form of deposit) has no bearing on the amount of insurance coverage.
If I have deposits in several different insured banks, will my deposits be added together for insurance purposes?

No. Deposits in different banking institutions are insured separately. However, if a bank has one or more branches, the main
office and all branch offices are considered as one bank. Thus, if you have deposits at the main office and at one or more branch
offices of the same bank, the deposits are added together when determining deposit insurance coverage, the total of which shall
not exceed P500,000.

Is there a need for a depositor to file his claim for insured deposit with PDIC?

Yes. Depositors will be advised through the national and/or local media and posters at the premises of the closed insured bank
and other public places within the locality on the schedule of distribution of claim forms by PDIC, receiving of claim forms by
PDIC, and the prescriptive date of filing claims by the depositors

When should the depositor of a closed insured bank file his claim with PDIC?

The depositor of the closed insured bank has 24 months from date of bank takeover to file his deposit insurance claim.

What happens when the depositor of a closed bank fails to file his claim within the 24-month period?

All rights of the depositor with respect to the insured deposit shall no longer be honored. But he may still make a claim against
the assets of the closed bank.

How long does it take PDIC to settle a claim for insured deposit?

PDIC aims to pay valid claims as soon as possible. Prior to payout, claims are examined thoroughly. This is to protect the
Deposit Insurance Fund (DIF) which is the source of insurance payments. Sometimes, depositors mistakenly assume that the
payouts are sourced from their deposits. This is not the case. The payouts are from PDIC’s own funds.

The claim for insured deposit should be settled within six (6) months from the date of filing provided all requirements are met
but the claim must be filed within twenty-four (24) months after bank takeover. The six-month period shall not apply if the
documents of the claimant are incomplete or if the validity of the claim requires the resolution of issues of facts and law by
another office, body or agency, independently or in coordination with PDIC

What processes are involved before PDIC starts servicing claims?

Deposit records are subjected to an examination prior to the start of servicing/settlement of claims. Claims are evaluated and
processed according to PDIC's standard procedures.

How long does the pre-settlement examination take?

The length of time needed for the pre-settlement examination of deposit liabilities of a closed insured bank largely depends on
the completeness and accuracy of records turned over by the Bank to PDIC and the number of deposit accounts to be examined.

If the deposit account in a closed bank is more than P500,000.00, what happens to the excess of the maximum amount of
insured deposit?
The claim for the uninsured portion of the deposit is a claim against the assets of the closed bank.

The claim may be filed with the Liquidator of the closed bank within sixty (60) days from publication of notice of closure.
However, payment of said claim will depend on the bank’s available assets and approval of the Liquidation Court. The schedule
of payment beyond the P500,000.00 maximum insurance shall be based on priorities set by law.